How do Freddie Mac & Fannie Mae Work to Support Underserved Markets?
Monday, the government-sponsored enterprises (GSEs) Freddie Mac, the Federal Home Loan Mortgage Corporation, and Fannie Mae, the Federal National Mortgage Association, announced their Underserved Markets Plans for 2018-2020 under the Duty to Service provisions required by the Housing and Economic Recovery Act of 2008. Three difficult markets are going to be targeted through these provisions, effective January 1, including affordable housing preservation, manufactured housing and rural housing.
Freddie Mac’s proposal incorporates amplified loan purchases in these markets in addition to research, expanded consumer education and new products. Highlights of the plan encompass re-engaging the Low-Income Housing Tax Credit (LIHTC) equity market; increasing liquidity for developers that qualify for federal subsidies, including Section 8 vouchers; collaborating with the U.S. Department of Agriculture (USDA) and the U.S. Department of Housing and Urban Development (HUD) to preserve affordable units; exploring opportunities in the single-family rental market to increase access to credit, provide liquidity, and promote more affordable housing options in rural areas; and expanding its support for manufactured housing communities.
“For more than 45 years, our innovations have brought liquidity, stability, and affordability to the mortgage markets, and Duty to Serve is an important continuation of those efforts,” said David Leopold, vice president of targeted affordable sales and investments at Freddie Mac Multifamily. “Freddie Mac is uniquely suited to tackle some of America’s most persistent housing problems, and we look forward to deepening this work.”
Fannie Mae also plans to expand its efforts to provide very low-, low- and moderate-income households access to affordable housing. Fannie Mae will also re-enter the LIHTC market, support the financing of housing for earmarked high-needs rural areas and populations, perpetuate instituted affordable housing properties and examine financing alternatives for manufactured housing.
“This is an important milestone in Fannie Mae’s ongoing efforts to improve access to mortgage financing and create affordable housing opportunities for people of modest means across the country,” said Jeffery Hayward, executive vice president and head of multifamily at Fannie Mae. “Our plan will use analysis, testing, innovative partnerships, and loan purchases to serve markets that need help the most.”
The conservatorship of the Federal Housing Finance Agency (FHFA) will have the GSEs’ plans reviewed by the agency and require approval to verify adherence to the enterprises’ charter acts, safety and soundness, and conservatorship and regulatory agreements, as said by FHFA.
“I congratulate Fannie Mae, Freddie Mac, and FHFA staff for the work they’ve done to reach this significant milestone,” said FHFA director Mel Watt. “The rough challenges associated with implementation are still ahead, however, to ensure that the plans meet affordable housing needs in underserved markets around the country.”